Real Estatetag:typepad.com,2003:weblog-1182153575165191792018-07-23T11:24:29+01:00Providing a forum for conversation on leading Real Estate topics, with insights, ideas and knowledge from our industry experts.TypePadClaire Handby – Honorary Doctorate Blogtag:typepad.com,2003:post-6a01543429fb37970c022ad35c4101200c2018-07-23T11:24:29+01:002018-07-23T11:25:13+01:00The topic of inclusive growth for all, particularly across STEM (Science, Technology, Engineering and Maths) subjects and related career paths continues to hit headlines in 2018, notably due to links with accelerating gender parity and addressing the pay gap. The shortage of people, particularly females, inspired to choose STEM subjects...Deloitte Real Estate

The topic of inclusive growth for all, particularly across STEM (Science, Technology, Engineering and Maths) subjects and related career paths continues to hit headlines in 2018, notably due to links with accelerating gender parity and addressing the pay gap.

The shortage of people, particularly females, inspired to choose STEM subjects for their academic qualifications, apprenticeship pathways and future career choices is an ongoing challenge.

It is a challenge, however, that has been met by one of our own team at Deloitte, within our Financial Advisory Real Estate team – Claire Handby – who we are proud to congratulate following her Honorary Doctorate in Business Administration award from the University of Salford.

A ‘STEM’ subject role model, Claire has paved an excellent and rewarding career since starting a two week work experience placement with a scaffolding company at 15 years old.

The experience inspired her to pursue a B-Tec Ordinary National Diploma (OND) in Construction at Stockport College and a Construction Management Degree in Newcastle Upon Tyne. Since graduating in 1998, Claire has worked for some of the top organisations within both the Construction Industry and the Global Corporate world of Big4 Consulting, to use her words:

“I have led a dynamic, stimulating, adventurous 20 year career within the Built Environment. I recognise that I have been given the right advice by trusted people, at the right time, embraced many opportunities to develop myself, alongside making a commitment to maintain life-long learning. As a result, I have continued to see my career twist and turn, where ultimately it has flourished right in front of my eyes, resulting in this latest award from the University of Salford, which I am so proud to accept.”

As I pause and reflect on these achievements, I share three observations from my conversations with Claire which offer a greater understanding as of the progress she has made to date. These are influeces that link directly to the topic of STEM –

School skills assessment linked to careers - A skills assessment questionnaire completed in school allowed Claire to assess attributes and interests at an early age. This matched her to the traits of typical role profiles for a job after school, and ultimately sowed the seed of her future roles. Creating awareness of the options available for children, at an ‘early teens’ school age is therefore crucial.

School work experience - The completion of a work experience placement whilst in school, is key for the construction industry, it led Claire to complete a vocational qualification, similar to apprenticeships today. This work experience is so often the inspiration for young people to choose a career path. Apprenticeships must continue to gain momentum to ensure these STEM work experiences linked to gaining academic merit remain widely available to people.

‘I can and I will’ mindset - Some young people are encouraged away from STEM subjects at home and by their peer group, however Claire is proof that encouraging strong values via a supportive family, friends and own personal will, drive and determination to succeed will allow young people to foster a belief that they can achieve anything they put their minds to.

Looking a little more at Claire’s past, you can also see she has had many defining moments throughout her life to date which have influenced her, from the tragic loss of her four year old sister to meningitis when she was 15 years old, to deciding to move from the Construction industry and join the Corporate environment of Big4.

It’s a path she continues to share to help others develop their own toolkits, in the hope that more people will also see the value of taking STEM subjects to secure and anchor their own futures.

Thankfully, there is still plenty more to come from Claire and the rest of our team at Deloitte and the wider Built Environment. To succeed, we must continue to role model to create more inclusive opportunities for all to excel, and promote STEM subjects as an ideal foundation of many careers.

The entire team at Deloitte is united in congratulating Claire on a fantastic achievement. We look forward to working together to continue to create a positive impact on society for many years ahead.

Simon Bedford - Partner, Deloitte Real Estate Advisory

Simon leads the local government development team at Deloitte Real Estate. With over 25 years in practice Simon has advised on major regeneration and development projects across the UK and further afield. Simon leads an 18 strong team operating across the country on development viability, land acquisition/CPO, developer procurement and strategic development projects.

Claire Handby – Director, Deloitte Real Estate

Claire is an experienced Director based out of our Manchester Office and has a broad range of performance improvement experience including client side interim Programme Director roles. For two decades she has worked in both public and private businesses primarily focused on the infrastructure, construction and real estate industry. With 10 years spent in Big4 Management Consulting, prior to this period she spent 10 years working for three leading infrastructure organisations; a construction consultancy company, a large contracting organisation and a developer.

Fast and Slow Buildings: Responsiveness through technology and designtag:typepad.com,2003:post-6a01543429fb37970c0223c851912e200c2018-06-11T15:23:17+01:002018-06-08T11:44:36+01:00Intelligent Buildings and the Internet of Things (IoT) in real estate are much talked-about, and for good reason. Analyst predictions suggest that there will be over 10 billion connected devices deployed in real estate by 2020. Watching this trend, the British Council for Offices (BCO) has just published a new...Deloitte Real Estate

Intelligent Buildings and the Internet of Things (IoT) in real estate are much talked-about, and for good reason. Analyst predictions suggest that there will be over 10 billion connected devices deployed in real estate by 2020.

Watching this trend, the British Council for Offices (BCO) has just published a new report on intelligent buildings: “Fast and Slow Buildings: Responsiveness through technology and design”. It was authored by the building service engineering firm Max Fordham, for which Deloitte was a contributing author. BCO members can read the full report here.

In this blog, I’ll explain what’s meant by building ‘intelligence’, and share four things we’ve learnt from our work in the intelligent buildings space.

Intelligent buildings contain connected networks of sensors and actuators, which integrate with traditional building systems (such as lighting and air conditioning) to continually improve and automate the operations of the building in question.

The network of sensors might include occupancy tracking which measures the ‘busyness’ of the cafeteria and suggests when to visit. There could be a set of sensors that monitors the indoor environment and the efficiency of air conditioning. A corresponding set of actuators would automatically optimise energy consumption and make the working environment more comfortable for each individual employee.

We’ve learnt a lot from our discussions with clients and vendors. Here’s four things you should know:

#1 Older buildings can be intelligent tooOften the term ‘Intelligent Building’ is applied to eye-catching new-build headquarters, but not to pre-existing buildings. It’s estimated that 85% of building stock that will exist in 2050, is already in existence today (Existing Homes Alliance). Thus, there’s a significant opportunity to leverage building intelligence by retrofitting existing spaces with intelligent systems, in addition to the opportunities presented by intelligent new builds.

#2 There’s more to intelligence than connecting building subsystemsHistorically, traditional building subsystems could be centrally controlled and were connected with one another. But a building being connected doesn’t equate to it being intelligent. Data from these subsystems needs to be shared and augmented by other sensor data, so that insight provided by this data can help solve wider business problems. Knowing where to find a free desk is useful. But what if your building directed you to sit next to a previously unknown colleague with shared interests to try and create an opportunity for serendipity – that’s intelligent.

#3 Don’t use technology for the sake of it – focus on business problems insteadDeloitte Digital’s Chief Disruptor, Ed Greig, regularly reminds innovation novices and veterans alike to “fall in love with the problem, not the solution”. It’s easy to get excited about sensors and touch screens, but this should always be underpinned by a clear understanding of the cost and benefit drivers that influence real estate space, as well as a deep understanding of the building users’ needs.

#4 Treat changes as experimentsHow do you measure the value of a new real estate technology? And how will you act when you’ve measured this value? When talking about the Internet of Things, we refer to the ‘information value loop’. A sensor creates data, which is communicated, aggregated and analysed. Then, someone or something has to act on the outcome of the analysis. The process starts over, measuring the impact of the new change. Realising the value of an intelligent building requires an iterative approach, where data communicates the value of the work and informs future decisions.

For information about how we’re helping clients understand Intelligent Buildings as part of the Global Consulting “Future of Work” agenda, contact Rob Scopes. For information about the Internet of Things, contact Ben Steward.

The British Council for Offices (BCO) has released “Fast and Slow Buildings: Responsiveness through technology and design”, for which Deloitte was a contributing author. BCO members can download the full report here.

Thomas Watling - Senior Consultant, Deloitte

Thomas works in Deloitte Ventures, helping turn novel business ideas into valuable and deliverable projects. His area of focus is on the Internet of Things(IoT), looking at how the IoT will impact different industries and how it can be harnessed to solve client problems.

Accelerating housing deliverytag:typepad.com,2003:post-6a01543429fb37970c01b8d2e3bde5970c2018-03-20T11:44:26+00:002018-03-20T09:08:17+00:00John Adams, partner at Deloitte Real Estate, discusses the growing challenge to support housing delivery across the UK amid an evolving housing market. At MIPIM we hosted events with Cities ranging from Belfast to Berlin, from Manchester to Stockholm and Barcelona. It was clear that housing delivery is a challenge...Deloitte Real Estate

John Adams, partner at Deloitte Real Estate, discusses the growing challenge to support housing delivery across the UK amid an evolving housing market.

At MIPIM we hosted events with Cities ranging from Belfast to Berlin, from Manchester to Stockholm and Barcelona.

It was clear that housing delivery is a challenge shared by all cities across Europe.

In the UK the debate tends to be loudest around planning policy. This tends to over shadow other themes. Whilst at MIPM I talked about four of these themes, namely:

skills and talent;

technology;

the role of the employer; and

the need for Place-based Partnerships.

Skills and TalentSir Oliver Letwin’s recently published preliminary findings into the build out of planning permissions identified a number of constraints holding back housing delivery including a limited supply of labour, building materials and capital, amongst others. As a generation of about 200,000 skilled workers approaches retirement, the number of new skilled entrants to the construction industry is not keeping up.

In that context innovation and applying new technology to speed up and make house building more efficient is required.

The construction industry currently spends around £200m on Research and Development, representing 0.9 per cent of total output – this is low compared to other sectors of the economy.

Modular housing is part of the solution. Companies such as Legal & General, Berkeley Homes are already investing in modular off-site factories, and others have introduced their own modular House types, Urban Splash, Pocket Living and Essential Living are all innovating with modular homes.

3D printing and robotics provides a digital technology that can transform the production of building components, and even build whole structures. Could it revolutionise house building in the same way it is predicted to transform production and assembly in other sectors, such as marine and automotive?

Rotterdam, for instance, is actively using 3D printing and applying it to construction and housebuilding with the help of start-up businesses to develop technology and partnerships with universities, young entrepreneurs and the construction industry.

The city has invested €100million in a platform for technology-led start-ups and has established a successful building technology hub. Start-ups are collaborating with students from the technical skills university, while the business university – Erasmus – is teaching entrepreneurial skills to start-up businesses to drive collaboration.

This support for innovation in housebuilding, applying digital technologies, and focus on start-ups and entrepreneurs could be a vision of how the UK could create a vibrant and “smart” housebuilding sector, with more small and medium sized players using technology to achieve speed and efficiency.

Our strategy to grow the housebuilding sector needs to embrace digital technology, AI and robotics. We need to invest more in research and development of housebuilding technologies, and in the entrepreneurial skills required to grow the number of small and medium sized builders.

The Role of the Employer – Deloitte’s ExperienceAt Deloitte, we are involved in all aspects of housing delivery, setting strategies and driving viability for the transformation of whole neighbourhoods such as Old Oak Common, the Olympic Park, and Manchester Life.

As an employer of over 1,000 graduates in an increasingly international market for talent, we have a responsibility to find innovative solutions to removing barriers to good quality housing that is in the right location from the first day they start work having left University.

To this end, we surveyed 986 graduates based in our London offices to gain a better understanding of what factors drive graduates’ decisions to rent, the cost to our employees and what more we could do to support them.

For over 50 per cent of the respondents, the cost of renting equated to 40 per cent or more of their net salary. 72 per cent of respondents said they would consider living with other Deloitte employees.

Using this insight, we created a pathway for our staff to secure better quality, more affordable purpose designed and managed private accommodation. We launched a new partnership with Get Living London, to provide a bespoke, easy to follow Pathway for 100 graduates to accommodation at East Village.

While this is a promising start, we are seeking to scale up this commitment through new partnerships. We have already extended our partner network to TIPI in Wembley, and looking to deliver innovative solutions and help our people find good homes to live in.

Place based Partnerships – Platforms for GrowthIt is not just about building homes, but about building communities, and creating strong local economies within them. If we forget that we will repeat the mistakes of the past.

We need more Place Based Platforms – linking housing to economic growth, linking tenures and types of housing to people. These platforms should be led by local authorities in partnership with Housing Associations, housebuilders, employers and Homes England.

It is not just about building homes but renewing and strengthening the capacity of communities to flourish, and residents can play their fullest contribution to the economic success of their areas.

To be self-sustaining, communities must be balanced and neighbourhoods must be attractive so that people choose to live in them. This is about place-shaping.

It is also about linking housing to growth and linking tenures and housing types to people.

Only local authorities working with communities can deliver this place leadership role working with the full range of housing providers, house builders, employers and Homes England.

John Adams – Partner, Deloitte Real Estate

John has 25 years’ experience of planning consultancy on complex major development projects across the country. John has an exceptionally wide range of experience of major strategic residential, regeneration, and commercial projects, advising both the private and public sectors. John heads the Deloitte Real Estate national planning team.

Richard Maung - Assistant Director, Deloitte Real Estate

Richard is an Assistant Director, specialising in town planning and development of land and property. He acts on behalf of both public and private sector clients, including developers, landowners and occupiers. He has experience in: managing major, complex planning applications; securing regulatory consents; coordinating stakeholder and community engagement; handling detailed planning and policy issues; submitting representations to local plan reviews and policy documents; advising on the development potential of sites as part of due diligence or acquisitions; and, the provision of general planning and development control advice.

Marianne Brook - Assistant Director, Deloitte Real Estate

Marianne is an Assistant Director in the London Development team and specialises in providing development consultancy advice to public and private sector clients on large-scale projects. Marianne joined Deloitte Real Estate in late 2012 from BNP Paribas Real Estate Corporate Property Strategy team. Marianne qualified as a chartered surveyor in 2009 having previously studied Property Development and Planning PgDip at London South Bank University and Geography (BA Hons) at Kings College London.

Dan Gregory is a Director in the Construction Cost Consultancy team within Deloitte Real Estate. Dan is a Chartered Surveyor with 20 years’ experience specialising in the commercial sector principally delivering residential projects and developer lead office schemes for both private clients and local authorities. Dan’s experience with a diverse range of clients has enabled him to develop skills in working with all members of project, client and funding organisations through-out the life of a construction project.

Sir Howard Bernstein - Strategic Advisor, Deloitte Real Estate

Sir Howard Bernstein is the former Chief Executive of Manchester City Council (1998-2017) and former Head of Paid Service for the Greater Manchester Combined Authority (2011-2017). One of the chief architects of Manchester’s resurgence over the last four decades, Bernstein now serves as a strategic advisor to several public, private and academic institutions in the UK and internationally specialising in health and social care, government reform and devolution, and regeneration.

Smart citiestag:typepad.com,2003:post-6a01543429fb37970c01b8d2e3a965970c2018-03-19T14:14:58+00:002018-03-19T13:54:34+00:00As MIPIM comes to a close, Deloitte Real Estate’s delegation reflects on one of the big themes of this year’s event - the evolution of Smart Cities Speaking at this year’s MIPIM, a clear theme to emerge has been the consistent and obvious challenge that affects cities all over the...Deloitte Real Estate

As MIPIM comes to a close, Deloitte Real Estate’s delegation reflects on one of the big themes of this year’s event - the evolution of Smart Cities

Speaking at this year’s MIPIM, a clear theme to emerge has been the consistent and obvious challenge that affects cities all over the globe, which is how we can utilise technology to shape the cities of the future.

MIPIM provides a unique opportunity for European Cities to meet and discuss the challenges that we all face – meeting the demands of growing populations, air quality, retaining the sense of community and place, and embracing the opportunities of Digital technology, AI, and renewable energy.

At our European Smart Cities Dinner on day one of MIPIM, we brought together leaders from across major European cities such as Berlin, Barcelona, Edinburgh, Stockholm, and a host of others to address the challenges each location is facing and how each is using technology to plan ahead.

Key themes to emerge included the need to use technology to engage with citizens.

In Cascais, Portugal, for example, representatives discussed their Participatory Funding & Civic Points App, which allows citizens to shape the city in which they reside. Current outputs of this commitment include increased engagement in local elections, while the ‘Cascais app’, which gives credit for voluntary work that can be used for discounts on public services, has helped to improve the welfare of the city and the people in it.

Also discussed were the challenges associated with making technology shareable and, while technology has always shaped places, it takes more than the presence of technology to breathe life into our cities. Planning the cities of the future must have collaboration at its core.

This is a theme echoed by Sir Richard Leese of Manchester City Council. Speaking on day two at Deloitte’s sponsored panel on the Manchester stand, his view that the task to make technology invisible and joined up was one shared by many delegates at MIPIM, and is reflected in the projects Manchester has nurtured in recent years.

Manchester’s City Verve project, for example, seeks to gather data about transport, energy use, culture and citizen engagement in an effort to improve public services. Talking bus stops are also planned, which allow users to have a dialogue with the transport system, while remote sensing has the potential for multiple uses, including helping district nurses care for their patients.

Belfast is building a world class creative and technology sector around a 100 GB link to the US. This platform, combined with the grit, vision and entrepreneurial skills of the business community, Universities and City has attracted the largest Cyber Security cluster outside the US, film studios making global brands such as Game of Thrones, and start-up businesses making break throughs in cognitive therapy.

While the technological possibilities are almost endless, at the heart of these initiatives needs to be a robust strategy and collaboration. Manchester is creating its first city wide spatial plan in an attempt to bring its ten City Districts together. Technology will be critical to communicating that plan to all sectors of society and age groups, particularly the young people for whom the plan will shape their futures.

Manchester and cities across Europe will need to use technology to reach out and engage with citizens about what they want their city to look like. Further than increasing citizen participation, technology should be a tool to strengthen democracy. Our attendance at MIPIM has offered a great deal of insight into the future of our cities. What is clear amongst the noise generated around smart cities is that there is no one size fits all solution.

In India it is about managing rapid urbanisation and pollution, while in the US it is all about mobility. Europe is different – there are mature cities hundreds of centuries old that have embraced technology as it has evolved through history. The city landscapes are set, and so it is about improving the quality of life.

Above all, however, it is all about engagement, and using technology to tackle social inequality. Next year, we hope to reflect on even greater progress as we learn from the best practice being shared by the smart cities of tomorrow.

Simon Bedford - Partner, Deloitte Real Estate

Simon leads the local government development team at Deloitte Real Estate. With more than 25 years in practice Simon has advised on major regeneration and development projects across the UK and further afield. Simon leads an 18 strong team operating across the country on development viability, land acquisition/CPO, developer procurement and strategic development projects. Over a varied career Simon has worked in local government, for an urban development corporation and a number of private practices including Jones Lang LaSalle and Building Design Partnership. Prior to joining Deloitte in 2008 he was managing director of a 40 strong economic development and consulting business with offices across the UK. Simon is a specialist in development strategy and delivery. He has led a number of large scale development advisory projects across the UK and also led on developer procurement, particularly on behalf of the HCA.

Catherine Wignall - Assistant Director, Deloitte Real Estate

Catherine plans and delivers multi-million pound mixed-use development schemes in the UK and European cities. She approaches complex projects with fresh eyes and a deep understanding of national best practices, treating each project as unique, delivering a tailored solution for each location. Catherine’s main skill lies in making the complicated simple for her clients. Catherine leads real estate teams throughout the project lifecycle, from selecting the teams, to securing instructions, and ultimately delivering the projects.

Sir Howard Bernstein - Strategic Advisor, Deloitte Real Estate

Sir Howard Bernstein is the former Chief Executive of Manchester City Council (1998-2017) and former Head of Paid Service for the Greater Manchester Combined Authority (2011-2017). One of the chief architects of Manchester’s resurgence over the last four decades, Bernstein now serves as a strategic advisor to several public, private and academic institutions in the UK and internationally specialising in health and social care, government reform and devolution, and regeneration.

John Adams – Head of Planning, Deloitte Real Estate

John has 25 years’ experience of planning consultancy on complex major development projects across the country. John has an exceptionally wide range of experience of major strategic residential, regeneration, and commercial projects, advising both the private and public sectors. John heads the Deloitte Real Estate national planning team.

MIPIM 2018: Showcasing the North Westtag:typepad.com,2003:post-6a01543429fb37970c01b7c9583087970b2018-03-19T10:20:35+00:002018-03-14T13:32:39+00:00Well MIPIM 2018 is over for another year. It was a very good show and yet again the North West shone. The programmes pulled together by both Liverpool and Manchester were the strongest I can ever remember. Liverpool majored on the waterfront with the port and the leisure / tourism...Deloitte Real Estate

Well MIPIM 2018 is over for another year. It was a very good show and yet again the North West shone. The programmes pulled together by both Liverpool and Manchester were the strongest I can ever remember. Liverpool majored on the waterfront with the port and the leisure / tourism sector again to the fore. Manchester presented a wide ranging programme but of particular note were the sessions on natural capital and global sport which added new dimensions to what was already a very diverse programme.

Looking back over the week there were a few things that I took away.

Firstly, our NW offering now transcends the European stage and in many areas we are front and centre. We had international speakers joining many of the platforms, where this used to be confined to London it is now very much part of our regional show.

Secondly, and perhaps ironically our European neighbours and friends have become closer associates than ever before. How does that work I wonder. Sharing best practice with our city colleagues from Sweden to Portugal and Spain to Belgium is par for the course. It wasn’t always like this and I think Manchester and Liverpool deserve great credit for developing their MIPIM programmes, having the confidence to showcase our real estate experience and then debating future strategies with cities that perhaps a few years ago we might have been slightly in awe of – not anymore. As this year’s Crane Survey amply demonstrated Manchester is undoubtedly one of the fastest growing cities in Europe, and has over the last few years become a fully grown up part of the European family. Liverpool has developed a truly distinctive offer and in its waterfront is envied by many of its counterparts across the continent.

Thirdly, it was a great year for Deloitte. We launched our Cities Advisory business – a dedicated offer aimed at core cities across the continent, a business that brings the whole of our offering into the real estate market. It was good to spend the week talking to colleagues and clients in variety of places and make some good headway in finding opportunities for them to invest in new ideas and products.

Onwards and upwards I would say – despite the many headwinds the North West is in a good place.

Simon Bedford - Partner, Deloitte Real Estate

Simon leads the local government development team at Deloitte Real Estate. With more than 25 years in practice Simon has advised on major regeneration and development projects across the UK and further afield. Simon leads an 18 strong team operating across the country on development viability, land acquisition/CPO, developer procurement and strategic development projects. Over a varied career Simon has worked in local government, for an urban development corporation and a number of private practices including Jones Lang LaSalle and Building Design Partnership. Prior to joining Deloitte in 2008 he was managing director of a 40 strong economic development and consulting business with offices across the UK. Simon is a specialist in development strategy and delivery. He has led a number of large scale development advisory projects across the UK and also led on developer procurement, particularly on behalf of the HCA.

MIPIM 2018: The cities of tomorrowtag:typepad.com,2003:post-6a01543429fb37970c01b7c9582f1a970b2018-03-15T14:59:29+00:002018-03-14T13:35:51+00:00A key talking point at this year’s MIPIM event has been the increasing prevalence of technology in the property sector, and more importantly, how we now have an opportunity and a responsibility to utilise technology to plan for the cities of the future. As the use of digital technology becomes...Deloitte Real Estate

A key talking point at this year’s MIPIM event has been the increasing prevalence of technology in the property sector, and more importantly, how we now have an opportunity and a responsibility to utilise technology to plan for the cities of the future.

As the use of digital technology becomes increasingly synonymous with our day to day existence, it is only a matter of time before this is reflected in the way we design and construct buildings.

At Deloitte, we recognise that doing more than maintaining the standard of living for the rapidly growing global population will rely on our ability to develop the way we manage urban neighbourhoods. Technology will be key to this.

It has been encouraging to hear the creative ways in which attendees and speakers at this year’s MIPIM have proposed the use of technology in real estate. From digital command centres to smart waste management systems and integrated sensor systems, the groundwork is being laid for the cities of tomorrow.

Our work with the city of Cascais represents a key case study in this respect. It is a shining example of how technology can make a positive difference to the lives of the people who live there.

Over the past few years, the city has implemented a large portfolio of technology-based improvements, ranging from energy-efficient buildings to remote parking payments. The result is a single, collaborative ecosystem that operates efficiently and effectively. The waste management system alone is expected to save the city nearly €900,000 per year, allowing Cascais to focus the right resources at the right place and at the right time.

More importantly, Cascais is developing a model that can be replicated by other European cities of similar size and inhabitants, and it may not be long before we see other locations follow suit.

The future of city planning and real estate development is incredibly exciting as the market embraces technology at an increasing pace. While there is still some way to go before we see these steps truly make a difference to the lives of citizens in cities across the North West, the discussions at this year’s MIPIM give me great encouragement that we are moving in the right direction.

John Cooper - Partner, Real Estate Advisory

John is a Partner in the Manchester Planning and Development team originally joined as a graduate in 1998. He has extensive experience of preparing Strategic Development Frameworks and managing complex Planning, Listed Building and Conservation Area applications. He advises on major city centre regeneration projects as well as commercial and residential projects in Greater Manchester, throughout the North of the UK and beyond.

MIPIM 2018: International appetitetag:typepad.com,2003:post-6a01543429fb37970c01bb09fb5c71970d2018-03-14T15:00:03+00:002018-03-14T13:38:19+00:00With MIPIM now in full swing, what is already clearly evident is the strong appetite for international investment in major cities across the North West. In recognition of the region’s potential as a great place to live, work, and visit, the international investor community continues to take more and more...Deloitte Real Estate

With MIPIM now in full swing, what is already clearly evident is the strong appetite for international investment in major cities across the North West.

In recognition of the region’s potential as a great place to live, work, and visit, the international investor community continues to take more and more interest in our cities. International markets such as South East Asia, Middle East, and the US, have already followed up that interest, with key developments such as the £1bn development of Airport City arising in recent years with foreign backing.

Growing overseas interest is reflected in this year’s delegation at MIPIM. With the second largest delegation of all 550 cities, Manchester is well represented at this year’s event, demonstrating the confidence the city has in its ability to capture the imagination of the MIPIM audience and use the event as an opportunity to grow the city’s presence further.

It is a confidence that is built on strong foundations. The devolution agenda is allowing local governments to take greater control over their own futures and dictate the terms of their expansion, while the ability to formulate clear, bespoke strategies across each city has benefitted the region. This reinvigorated focus, which has also seen local governments activate partnerships with the public, private, and education sectors, has been key to the success of these cities.

Northern Powerhouse initiatives are also influencing decisions about further investment. Conversations about connectivity and greater investment in infrastructure across the North can only be a positive step in attracting overseas investors.

Taking part in MIPIM, it is encouraging to see conversations taking place about what the North West has to offer for investors. New partnerships are being formed all the time, giving us great confidence that the region will continue its push on an international scale.

The future of the North West looks bright and we look forward to seeing our cities reach even greater heights in the years ahead.

Catherine Wignall - Assistant Director, Deloitte Real Estate

Catherine plans and delivers multi-million pound mixed-use development schemes in the UKs towns and cities. She approaches complex projects with fresh eyes and a deep understanding of national best practices, treating each project as unique, delivering a tailored solution for each location. Catherine’s main skill lies in making the complicated simple for her clients. Catherine leads real estate teams throughout the project lifecycle, from selecting the teams, to securing instructions, and ultimately delivering the projects.

MIPIM 2018: A year for the regions to make an impacttag:typepad.com,2003:post-6a01543429fb37970c01bb09fb12eb970d2018-03-13T15:00:00+00:002018-03-13T15:00:00+00:00Monday at MIPIM seems to have become a really productive work day over the last few years. Perhaps that owes something to the early flight out of Liverpool which has become increasingly popular. So what’s to look forward to this year at MIPIM? Well firstly I don’t think I remember...Deloitte Real Estate

Monday at MIPIM seems to have become a really productive work day over the last few years. Perhaps that owes something to the early flight out of Liverpool which has become increasingly popular.

So what’s to look forward to this year at MIPIM?

Well firstly I don’t think I remember stronger programmes from the North West than we will see this year. Both Lancashire and Cheshire have brought out strong delegations, Liverpool is being led by Steve Rotheram, who will put on a very strong Merseyside programme and I don’t think I can remember better content than that being put forward by Manchester this year, so much to look forward to.

Despite Brexit headwinds the UK regions are doing well, the Deloitte Crane Survey recently published points towards record construction levels in the regional centres and increasing confidence across the core market areas. We will hear much this week that reinforces the message that major regional centres offer a very viable and attractive alternative to London.

From a Deloitte perspective Monday was a big day for us. Alongside meetings with the leadership teams from Edinburgh, Coventry and Liverpool we hosted our first European Cities Dinner. With the help of our strategic advisor, Sir Howard Bernstein, we launched our newly formed European Cities Practice which focuses initially on 12 Cities across the continent where we already have substantial business connections. In due course we plan to extend the business as the markets expand.

From a personal perspective I am delighted that we will run this business from Manchester, and grow an already burgeoning export market from the city. With guests having joined us from Stockholm, Munich, Lisbon, Barcelona, Rotterdam to name a few as well as many of the UK regional city leadership teams it was a productive day and a cracking start to MIPIM 2018.

Simon Bedford - Partner, Deloitte Real Estate

Simon leads the local government development team at Deloitte Real Estate. With more than 25 years in practice Simon has advised on major regeneration and development projects across the UK and further afield. Simon leads an 18 strong team operating across the country on development viability, land acquisition/CPO, developer procurement and strategic development projects. Over a varied career Simon has worked in local government, for an urban development corporation and a number of private practices including Jones Lang LaSalle and Building Design Partnership. Prior to joining Deloitte in 2008 he was managing director of a 40 strong economic development and consulting business with offices across the UK. Simon is a specialist in development strategy and delivery. He has led a number of large scale development advisory projects across the UK and also led on developer procurement, particularly on behalf of the HCA.

Secondary Shopping Centres – Embracing the ‘New Normal’tag:typepad.com,2003:post-6a01543429fb37970c01bb09f9ba64970d2018-03-12T12:10:01+00:002018-03-08T14:23:35+00:00Shopping centres account for nearly 15% of total retail floorspace in the UK. Costar estimates that there are more than 1,400 shopping centres across the UK of which only 276 are classified as “Prime” or “Major Urban”. While representing less than 20% of shopping centres by number, these dominant schemes...Deloitte Real Estate

Shopping centres account for nearly 15% of total retail floorspace in the UK. Costar estimates that there are more than 1,400 shopping centres across the UK of which only 276 are classified as “Prime” or “Major Urban”. While representing less than 20% of shopping centres by number, these dominant schemes account for nearly 50% of total shopping centre floor space on their database. The space that remains is spread across more than 1,100 schemes which are variously defined as “Urban”, “District” or “Neighbourhood” but all of which, in investment parlance, might be labelled “Secondary” or even “Tertiary” shopping centres. Many of these secondary schemes are now dated and visibly starting to struggle. The logic that led to their initial development is increasingly undermined by the growth of online sales and the preference of consumers for more convenient retail parks on the edge of town centres.

All shopping centres face huge challenges as they compete for a dwindling population of occupiers. The traditional tenants of secondary schemes in particular are retrenching. A number of retail failures in recent years have left big holes that are difficult for landlords to fill. In recent years the response of asset managers to diminishing demand from traditional retailers has been to turn to the casual dining and leisure markets to mop up surplus space. These levers are now becoming increasingly difficult to pull as a combination of the squeeze on disposable income and overexpansion by the operators dry up demand. The consequence is that both occupiers and investors are pursuing a “flight to quality” focussing on only the best assets in the best locations.

The future challenges for anything but the best shopping centres have been highlighted by the recently announced Hammerson/Intu and Westfield/Unibail merger deals. While very different in terms of sheer scale, both transactions suggest an acknowledgement that long term value and sustainable growth will increasingly be concentrated in the biggest and the best schemes. Funds realised from any disposals of weaker assets can be applied to reduce gearing and reinvest in maintaining the primacy of the best assets. In this respect, it is telling that Westfield publicly differentiate between their “Flagship” and “Regional” shopping centres in their reporting. This split indicates how the biggest players now perceive their portfolios and disclose their results in order to differentiate themselves to investors and reinforce the message about the strength of their assets in comparison to the wider sector.

Traditional “General retail” is no longer the mainstay and driver of value in the biggest and strongest “Flagship” schemes.

A side by side comparison between flagship and regional demonstrates the changing focus of modern retail space.Source: Westfield H1 2017 financial results presentation

This merger activity and the drivers behind it raise important questions for holders of secondary shopping centre assets. Deloitte has analysed reported transactions since Jan 2007 in respect of more than 260 “secondary” shopping centres1 covering more than 44m sq.ft. of space with a total transaction value of £12bn. The period from 2010 saw substantial transaction volumes of this stock. Since a peak in 2015, both transaction volumes and prices per square foot dropped to a point where the market is now all but stagnant.

Source: Deloitte Research/Costar

Of equal note is the change in the ownership base for this type of asset since 2007. Property companies, banks and administrators have disposed of stock which has subsequently been snapped up by pension funds, REITs, private equity and, increasingly, Local Authorities.

Source: Deloitte Research

Each group that has been active in the market will have had their own motivation for increasing their holdings and will develop their own responses to the current conditions. However, for all of them there is a risk that any permanent market pricing correction arising from the “new normal” of diminishing occupier demand for bricks-and-mortar stores could undermine their plans. Indeed, if the opinion of the markets is anything to go by, the new body of investors seems to be swimming against the tide. Market scepticism could be said to be demonstrated by the significant discount to NAV witnessed for a number of the REITS specialising in this sector with secondary shopping centres featuring prominently in their portfolios.

Those who bought in to the market in anticipation of a recovery in occupier demand or a significant yield shift have been frustrated. A number of schemes and, indeed, portfolios have failed to find buyers on the turn hampered by a market perception that many schemes remain over rented and, consequently, overpriced. The response is to refinance and wait for the market to improve. It could prove to be a long wait.

Local Authorities have been surprisingly active in the market, spotting a potential arbitrage between cheap money and high yielding secondary shopping centres. But there is more to it than that, particularly where Local Authorities see themselves as guardians of their own town centres in areas that are no longer attractive to private sector investors. Kick starting local regeneration while contributing valuable revenue to support council services is a noble intention but, as an asset class, secondary shopping centres are labour intensive and require specialist management with a clearly defined long term vision. In this difficult climate the challenge for Local Authorities will be to ensure that their town centres are paved with more than good intentions.

Occupier demand is key to the sustainability of this asset class but Deloitte’s analysis suggests that secondary shopping centres are increasingly dependent on a dwindling pool of core occupiers. The sector is particularly sensitive to the failure of large, multiple retailers, but there is also the worrying steady attrition of units as occupiers across the spectrum of “general retail” face up to their own particular online disruptions and right size their portfolios - emptying the rental income bucket faster than hard-working asset managers and agents can refill it.

Frequency with which each retailer is recognised as one of the top 3 “anchor” tenants in secondary shopping centres transacted 2007 - 2017

Source: Deloitte Research

The first major increase in retailer insolvencies for 5 years and particularly the significant increase (55%) in the number of large retailers ( those with more than 10 stores) that have gone into administration shows just how challenging the market is for retailers with large bricks and mortar portfolios to trade profitably. Within this general malaise is a swathe of CVAs with retailers seeking rent concessions from landlords in order to survive.

This trend hints at a fundamental disconnect between the contractual rent and retailers’ ability to generate a reasonable return from their space in the face of dwindling footfall and the challenges of online. In anything but the most prime locations it seems likely that a new rental model that better reflects an economically sustainable cost for the space will ultimately be forced on landlords. In the first instance, this is likely to take the form of a wider reliance on turnover rents. This may prove challenging and countercultural for both landlords and tenants; with landlords forced into a closer involvement in the trading performance of their tenants while retailers will need to get more comfortable with sharing their sales figures with their landlords.

So, if the current state of the market does represent a “new normal” what new strategies will need to be deployed if value is to be enhanced or, at least, maintained?

The existing asset management levers of reconfiguring and re-letting will need to be pulled more vigorously than ever but, in addition to this, the repurposing of space to redress the balance between supply and demand will need to be actively pursued. Conversion from retail to residential is a much discussed route and there are several good examples of this already (and a hint of potential government support in a recent White Paper) but it may not be as simple as that. Shopping centres are large and complex structures and not nearly as easy to redevelop cost effectively as an outdated office box. The dynamics of the local property market will dictate if such redevelopment makes financial sense. The fear must be that in many locations where the lack of tenant demand might make such an approach attractive, the cost of redevelopment coupled with depressed local house prices may render any such strategy uneconomical. What then?

Realistic valuation will need to underpin the regeneration of secondary shopping centres. Whether that means a fundamental “correction” in the face of the structural changes challenging the market remains to be seen. For now, the investment market in secondary stock has all but ground to a halt with a variety of investors left holding the parcel after the music has stopped (and scared to unwrap it). In the absence of any dramatic recovery in the occupier market, pricing is likely to come under sustained pressure, driven by the weight of stock on the market and potentially exacerbated by yet more as the major players start to weed out their weaker assets. 2018 could be a year to watch!

Hugo Clark – Head of Retail Property Strategy, Deloitte Real Estate

Hugo is the head of retail property strategy for Deloitte Real Estate with responsibility for providing technical and strategic advice on retail property for occupiers and institutional landlords. As a Chartered Valuation Surveyor, he has significant retail property experience including M&A, portfolio optimisation, property function organisation and design, workout and realisation strategies on major property portfolios.

Constantin Leeb – Manager, Real Estate Consulting

As a manager in Real Estate Consulting, Constantin provides analytically-robust advice to major private and public sector organisations. He has worked on a number of engagements providing a broad range of strategic and technical advice to address a number of real estate business challenges. He has experience of insolvency support, restructuring, portfolio analytics, portfolio planning, estates/location strategy, workplace optimisation, facilities management and real estate technology strategy.

1 “Secondary” is here defined as schemes categorised as “District” or “Urban” by Costar with a transaction value in excess of £10m

A digital disruption is shaping our futuretag:typepad.com,2003:post-6a01543429fb37970c01b7c9539932970b2018-02-28T16:27:38+00:002018-02-28T16:26:57+00:00Technological advances remain as captivating and disruptive as ever for the real estate, infrastructure and construction industries; digital disruption is shaping our future. This disruption will be driven by both changes to the needs of the consumer and also changes to how work is carried out within the real estate,...Deloitte Real Estate

Technological advances remain as captivating and disruptive as ever for the real estate, infrastructure and construction industries; digital disruption is shaping our future. This disruption will be driven by both changes to the needs of the consumer and also changes to how work is carried out within the real estate, infrastructure and construction industries.

"…as technology becomes ever more sophisticated… an ability to apply knowledge in different contexts and adapt skills across jobs and industries will be essential…"1

David SproulChief Executive of Deloitte UK17 January 2018

Following Deloitte's TMT Predictions Event 2018 in Manchester, Deloitte Real Estate offers their forecasts on some key disrupters for our clients to continue to consider within real estate, infrastructure and construction sectors. The following shares some insight on the continued impact of smartphones, mobile broadband, augmented reality and machine learning.

Smartphones - Deloitte Global predicts that by the end of 2023, the adoption of smartphones by citizens in developed countries will surpass 90%2, consolidating the smartphone as the primary access point to digital services and content. The smartphone will continue to assume non-PC functions such as serving as keys for vehicles, buildings and construction sites due to the success of security functions such as Apple's TouchID and FaceID.

Smartphones have revolutionised the way people interact with each other and the next decade will transform the way enterprises interact. For example, as agile working practices become increasingly prevalent, the need for workers to be anchored to their PC will continue to reduce (will they even need a PC?). IT departments should look to evaluate how to effectively integrate smartphones more into their IT strategies and working styles. They could consider the best pairing between devices and employees and how best to utilise smartphone biometric authentication to improve business security. The increase in agile working will also alter the real estate needs of businesses as less desk space will be needed in offices as more employees are able to work remotely. An evaluation by NHS England for example, predicted that by 2020 smartphones could become “the primary method of accessing health services” with almost 16 million enquires dealt with by algorithms, rather than telephone operators sitting in a call centre environment.3

Access to social media is also playing a larger part in home buying. Estate agencies are listing properties on sites such as Facebook and Twitter, in a bid to reach users in a simple, streamlined and cost effective manner. 3D virtual or video tours of properties and construction projects are becoming increasingly popular allowing potential purchasers to walk through the development from the comfort of their sofa or whilst on the move via their phones.

Mobile Broadband - Mobile broadband is the marketing term for wireless internet access through things such as portable modem, USB wireless modem (dongle), tablet or smartphone.

By 2023, 5G networks should have launched in most developed markets, offering much greater capacity and connectivity speeds, consolidating smartphones as the primary and perhaps even solitary work device. This has the potential to serve as a key disruptor in the communication and exchange of data in the real estate, infrastructure and construction sectors. The greater demand for mobile broadband across wider and geographically remote areas could have a noticeable impact on the infrastructure sector due to increased demand for installation, maintenance and upgrade of antennas and base stations which are suitable for driving the transition to 5G connectivity for all, at pace.

In the long term, perhaps the most important market for mobile broadband will be the developing world. Challenges still present themselves in these cities as there is often no coaxial cable and few or no fibre-optic lines installed in the ground. Therefore, wireless data delivery is often the only way to move and share data. The infrastructure sector being increasingly prepared to respond to this demand by providing the capabilities required for global access to 5G connectivity quickly, is an opportunity, with digging roads up not the only answer.

Virtual and Augmented Reality - Virtual Reality (VR) is a wholly computer-generated scenario that simulates a realistic experience. Augmented reality (AR) is a special effect that enables digital images to be superimposed on to real ones. AR and VR are not new to 2018; what differs is quality.

We have seen several practical applications of such technology in our sectors, including the ability to position furniture in a room to see how the layout may look, appealing particularly to architects and designers. However, in reality, the bulk of AR will continue to be used on social media platforms. We expect that during 2018 and onwards, an increase of home decoration apps will be released into the market. However, such apps are likely to complement rather than replace the visit to the showroom. Some predict AR to be replacing the tape measure too this year, but don’t worry surveyors, we don’t think robots will be taking your jobs that quickly.

VR and AR allow real estate and construction professionals to offer a unique experience and perspective to potential buyers and other stakeholders by digitally touring properties and construction sites from anywhere in the world. This technology is only expected to grow further, as indicated by a recent Goldman Sachs report predicting the VR and AR market in real estate to be worth at least $80 billion by 2025.4

Machine Learning - Machine learning (ML) is an artificial intelligence (AI) that enables systems to learn and improve from experience.

Labelled as the revolutionary technology of the future, artificial intelligence has already started to reshape the way it is carried out. For example, a report produced by NHS England predicts that NHS 111 calls will be handled by robots within two years. Within commercial real estate, chat-bots are altering the way in which real estate services are provided, with recommendation engines transforming the way we find property. Residential real estate firms Trulia in the US and Sevi in Singapore are two examples of companies using Facebook chat-bots for users to message their property needs and the bot serves up listings, summaries and images.5

We also expect the automation and efficiency within contract management will be significantly improved too. With AI systems being used to extract and codify contract clauses, connect documents with amendments as well as identify missing documentation. AI could identify areas of risk where key clauses or terms have been omitted and recommend additions or alternatives.

Summary - The term 'digital disruption' is an understatement, more fitting perhaps is the 'Digital Revolution', one much more along the lines of its industrial predecessor.

"The fourth Industrial Revolution will completely alter how we produce, how we consume, how we communicate and how we live."

Klaus SchwabFounder and Chairman of the World Economic Forum2018 World Economic Forum in Davos, Switzerland.

By linking up physical infrastructure to the digital world, technology empowers us to transform our industries, our economy and shape our future. This is directly linked to the real estate, infrastructure and construction opportunities we seize today. If you would like to discuss any of the content further with the team please do not hesitate to connect with us.

Claire Handby – Director, Deloitte Real Estate

Claire is a Director in our Real Estate Team, advising on Real Estate, Capital and Infrastructure Projects. Over two decades she has gained a range of leadership, consulting and management competence covering Portfolio, Programme, Project and Assurance Roles having worked for both public and private sector businesses. Claire has an increasing focus to help our clients continue to respond to their digital disruption opportunities and challenges within these sectors.